Don't Close Credit Card Accounts
This tip might seem anti-intuitive, but leaving credit card accounts open after they are paid off is great for your credit score. Your credit score goes up in correlation with your credit history, so revolving accounts can boost your score if they have no balance.
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By:Patrick Mansfield |U.S. Gov Connect
Simple Steps To Take In Rebuilding Your Credit Report
Having a good credit score is the best way to realize opportunities in terms of your financial freedom and buying power. A good credit score falls in the range between 680 and 739, and excellent scores are above 740. Having good credit is essentially a guarantee that you'll be able to get a good interest rate when applying for a loan, and it can even affect your insurance costs and employment potential. Almost everyone would like to give their credit score a bit of a boost, but what are the best methods for achieving results?
1. Know Your Payment History
The largest factor that affects credit scores is payment history, so those that are behind need to bring any accounts with missed payments up to date. Those that can't afford to bring their accounts up to date should seek out the aid of a credit counseling agency to help set up a payment plan with the creditors. It is possible to contact your creditors directly to create such a plan, and they will typically work with you if they believe you are sincere in your desire to repay your debt.
2. Error Checking
Checking your credit report will not lower your score. When you check your credit report and score it is considered a soft pull. it is important to be aware of what is on the report. By knowing the details of the report, you can know exactly what needs to be improved, and you can determine if there are any errors on the report that might affect your score. Everyone is entitled to one free report each year from each of the three credit bureaus, which are Equifax, TransUnion, and Experian. If you find any errors or fraudulent accounts, you can dispute the item and have it removed from the report, which will boost your score to its proper level. It is also possible to have your reports frozen if you believe ongoing fraudulent behavior is occurring.
3. Don't Close Credit Card Accounts
This tip might seem anti-intuitive, but leaving credit card accounts open after they are paid off is great for your credit score. Your credit score goes up in correlation with your credit history, so revolving accounts can boost your score if they have no balance. Some credit card users might be required to close certain accounts if they opt for a payment plan, but it is best to leave the oldest accounts open for as long as possible. The more credit history you have, especially with a low or zero balance, the greater your credit score will be.
4. Installment Loans
Revolving accounts are just one aspect of your credit score, and installment loans make up another. The difference between a revolving account and an installment loan is that the installment loan has a set balance that the user is paying down, while revolving accounts start with a zero balance that is then built up and paid off. That is why credit cards are classified as revolving accounts and mortgages are classified as installment loans. Installment loans are good for your credit report, especially if you never miss any payments or make double payments each month. Smaller loans like those used for vehicle purchases are easier to get than mortgages, but they both provide the same utility to your credit report. Be careful not to apply for excessive loans, though, because each credit check that is necessary to approve a loan can have a negative effect on your report.
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